Succession planning for the post of CEO at GE Case Study 3 of Ch 4 (Suc... General Electric or GE is an American multinational conglomerate corporation incorporated in Schenectady, New York. In November 2000, GE announced that Jeff Immelt, the president and CEO of GE Medical Systems, would be the successor to Jack Welch, the Chairman and CEO of the company. Welch was to retire in September 2001, after a successful 41-year stint at GE. According to GE sources, Immelt would become the president and chairman-elect of GE, a member of GE board and Corporate Executive Office, with immediate effect. The announcement ended the battle that was viewed on Wall Street as the hottest corporate succession race of the decade. The three candidates for the top spot at GE were Immelt, W. James McNerney (McNerney), CEO of GE Aircraft Engines, and Robert L. Nardelli (Nardelli). president and CEO of GE Power Systems. Neither GE nor Jack Welch revealed exactly why Immelt had been preferred over the other two. Welch himself went on record to say that the other candidates were equally capable of running GE. Welch wrote in his autobiography, that choosing between the final trio "was the most difficult and painful [decision] I ever had to make....All the three exceeded every expectation set for them. Their performance was off the charts. Any one of the three could have run GE. According to Welch, it was his nose and his gut that prompted him to select Immelt. Analysts believed that the fact that Immelt was younger than the other two aspirants at 44 years of age, contributed to his selection. GE is known to favor steady leadership over a long period. Since Immelt was six years younger than his rivals, he would have an opportunity to plan for a further twenty years at GE. like Welch, who became CEO about the same age, and stayed at the company to implement his plans. Welch also characterized Immelt as "a natural leader, and ideally suited to lead GE for many years," adding weight to his view. As soon as Immelt was selected to take over as CEO, the media began to make comparisons between Immelt and Welch, and some expressed doubt as to Immelt's ability to match Welch's charisma or impeccable record. Many Wall Street analysts believed Welch was one of the most important and influential business leaders of the 20th century, and clearly Immelt would have to work hard to match the performance of his predecessor. The fact that McNerney and Nardelli were taken on as the CEOs of 3M and Home Depot. respectively, within weeks of their losing out to Immelt, was in itself taken by observers as testimony to corporate America's confidence in leaders groomed by GE Leadership Development in GE The company used mainly annual performance reviews for identifying potential candidates, until the early 1980s. However, after Welch took over as the CEO, the succession planning process at GE became a more systematic process, with the use of various analytical tools and the involvement of the top management in leadership development and succession planning. Since the early 1980s, the annual Human Resource Reviews (popularly called Session C) had been at the heart of succession planning at GE. The Session C process was reportedly given as much importance as financial monitoring in GE. The CEO Succession Planning Process The succession planning by Welch for his post had started way back in 1994, when with help of Bill Conaty and Chuck Okosky, both vice-presidents, HR and Executive Development, created" list of essential qualities, skill and characteristics an ideal CEO" should posses. The list ma included elements such as integrity and1 of 2dership, experience, edge, stature fairness, energy, balance, insatiable appetite for enhancing knowledge, courageous advoca W and most importantly, stomach to play for high stakes and being comfortable operating unc. microscope.Immelt Makes His Mark During the first two years as GE's CEO, Immelt had to face many problems on account of September 11, 2001 attacks, the Enron debacle, and the global economic slump during the early 2000s, which affected the company's earnings severely. As a result, GE for the first time in ten years, failed to report double-digit earnings growth in the fiscal 2002. Though Immelt was not held responsible for the company's problems during this period, as most of them were triggered by the external environment, nonetheless he had to deal with the crisis and he started to taste success after a two years' struggle.
Questions: 1. Do you think considering Immelt as the successor for the CEO's post on the basis of his age was an appropriate decision? Verify your answer.
2. What are the methods do you suggest for determining successors for the important positions in a company?
3. What are the qualities a company should look for from its CEO? Explain your answer from the case's perspective and modify it if necessary.
4. Do you think Immelt was a successful CEO? If yes, verify and if